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A manager can have limited faith in transfer prices as substitutes for market prices when measuring a profit center's performance, as transfer prices may not reflect true market conditions or value. They can be influenced by internal policies and may not account for external market fluctuations. While they can provide insights into internal efficiency, reliance solely on transfer prices can lead to distorted performance assessments. Therefore, it's essential to complement transfer prices with external market data for a more accurate evaluation.

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5d ago

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